Nigeria Tax Rates 2026
Complete guide to Nigerian personal income tax rates under the Nigeria Tax Act 2025. The first ₦800,000 is now tax-free.
What are the Nigerian tax rates for 2026?
Under the Nigeria Tax Act 2025 (effective January 1, 2026), personal income tax rates are: 0% on the first ₦800,000 (tax-free); 15% on ₦800,001 to ₦3,000,000; 18% on ₦3,000,001 to ₦12,000,000; 21% on ₦12,000,001 to ₦25,000,000; 23% on ₦25,000,001 to ₦50,000,000; and 25% on income above ₦50,000,000.
2026 Personal Income Tax Brackets (PAYE)
| Annual Taxable Income | Tax Rate | Cumulative Tax |
|---|---|---|
| ₦0 - ₦800,000 | 0% | ₦0 |
| ₦800,001 - ₦3,000,000 | 15% | ₦330,000 |
| ₦3,000,001 - ₦12,000,000 | 18% | ₦1,950,000 |
| ₦12,000,001 - ₦25,000,000 | 21% | ₦4,680,000 |
| ₦25,000,001 - ₦50,000,000 | 23% | ₦10,430,000 |
| Above ₦50,000,000 | 25% | Variable |
Note: These are marginal rates. You don't pay the higher rate on all your income—only on the portion within each bracket. For example, someone earning ₦5,000,000 pays 0% on the first ₦800K, 15% on the next ₦2.2M, and 18% on the remaining ₦2M.
What Changed from 2025 to 2026
Tax-Free Threshold
Before: ~₦300,000
Now: ₦800,000 (tax-free)
Rent Relief
Before: No rent deduction
Now: 20% of rent (max ₦500K)
How much tax do I save under the new 2026 rates?
Most Nigerians save significantly under the 2026 tax rates. Someone earning ₦5,000,000 annually saves approximately ₦165,000 compared to the old law. Those earning under ₦800,000 now pay zero income tax, down from around ₦50,000-₦75,000 previously.
Allowable Tax Deductions
8%
Pension
Employee contribution to approved pension scheme
2.5%
NHF
National Housing Fund (employees only)
5%
NHIS
National Health Insurance Scheme
Rent Relief (NEW in 2026)
Claim 20% of your annual rent as a tax deduction, up to a maximum of ₦500,000. You'll need rent receipts or tenancy agreements as proof.
Frequently Asked Questions
What are the Nigerian tax rates for 2026?
Nigerian personal income tax rates for 2026 are: 0% on first ₦800,000; 15% on ₦800,001-₦3,000,000; 18% on ₦3,000,001-₦12,000,000; 21% on ₦12,000,001-₦25,000,000; 23% on ₦25,000,001-₦50,000,000; and 25% on income above ₦50,000,000.
What is the tax-free threshold in Nigeria 2026?
The tax-free threshold in Nigeria for 2026 is ₦800,000 annually. This means the first ₦800,000 of your taxable income is not subject to income tax. This is a significant increase from the previous threshold of approximately ₦300,000.
How is income tax calculated in Nigeria?
Nigerian income tax is calculated using progressive marginal rates. First, deductions (pension 8%, NHF 2.5%, NHIS 5%, rent relief) are subtracted from gross income. Then tax is applied at each bracket rate only on the portion of income within that bracket.
What is the highest tax rate in Nigeria?
The highest personal income tax rate in Nigeria for 2026 is 25%, which applies to annual taxable income above ₦50,000,000. This rate only applies to the portion of income exceeding ₦50 million, not the entire income.
When did the new Nigeria tax rates take effect?
The new Nigerian tax rates took effect on January 1, 2026, under the Nigeria Tax Act 2025 which was signed into law in 2025. The act introduced a higher tax-free threshold and restructured tax brackets.
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